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New York-based G-III Apparel Group, Ltd. (GIII - Snapshot Report) reported adjusted earnings of $2.43 per share in the third quarter of fiscal 2013, surpassing the Zacks Consensus Estimate of $2.31. Reported results were also above the company’s guided range of $2.25 to $2.35.

On a GAAP basis, including expenses associated with the acquisition of Vilebrequin, the company recorded earnings of $2.37 per share, substantially above the year-ago earnings of $2.16 per share.

Quarter Highlights

G-III Apparel’s net sales surged 6.6% year over year to $543.5 million, but fell short of the Zacks Consensus Estimate of $569.0 million as shipments during the end of October were disrupted by Hurricane Sandy.

The significant growth in net sales was chiefly aided by improved performance of wholesale licensed apparel (up 7.6% year-over-year) and retail operations (up 21.0%), partially offset by a dip of 6.7% in the wholesale non-licensed segment.

The robust wholesale licensed apparel sales were driven by higher sales of Calvin Klein products. Retail sales surged on the back of unit growth as well as comp uptick of 18.9% in the quarter.

During the quarter, G-III Apparel’s gross profit expanded 17.2% to $190.2 million due to lower input costs.

Liquidity Position

At the end of the quarter, G-III Apparel had cash of $39.6 million and shareholders’ equity of $419.0 million, compared with $16.1 million and $351.9 million in the year-ago quarter, respectively. Long-term debt at the end of the quarter was $18.6 million.


Based on strong third quarter results, the company raised its adjusted earnings per share guidance for 2013 to $2.82–$2.92 from the previous forecast of $2.74 to $2.84. Adjusted EBITDA outlook is also increased to $110.8 million–$114.2 million from $108.2 million–$111.5 million. However, net sales projection is cut from the earlier forecast of $1.41 billion to $1.39 billion.

Our Take

G-III expects to conclude 2013 on a great note based on expansion through unit growth, strong demand for its core products and new business initiatives. In the future, management also expects to grow through acquisitions and presently remains upbeat regarding the acquisition of the leading luxury resort brand, Vilebrequin.

The acquisition will boost growth through geographic expansion and support in the development of a high margin multi-category business.

Additionally, we expect estimates to go up in the coming days driven by upbeat third quarter results and increased outlook. The Zacks Consensus Estimates for fiscal 2013 and fiscal 2014 are pegged at $2.86 and $3.25, respectively.

G-III, engaged in the apparel business, currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. We are also maintaining our long-term Outperform recommendation on the stock. G-III peers include Columbia Sportswear Company (COLM - Snapshot Report) and Nike Inc. (NKE - Analyst Report).

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